Is Tesla Stock a Good Investment?

The following is a 3rd party contribution 

Tesla’s stock price recovered much of its recent losses triggered by the recent global market sell-off, and the company is currently trading around USD 330. This is slightly below the level it reached on January 25th, after which it rose to USD 354, fell as low as USD 310 and then rebounded to USD 357. However, it is currently moving back down and could soon approach the previous support level of USD 309.54.

Whether TSLA continues to fall or stages another rally, traders can take advantage of all price movements by using stock trading platforms. Many brokers, such as, offer numerous trading tools and advanced charts, allowing members to make more informed trading decisions. The question for many is now whether Tesla stock represents a sound investment.

The valuation of the company still seems too high for many analysts, since the company is yet to make a profit and is burning a lot of cash, not to mention its production problem regarding the new Model 3. According to Barclays, the electric vehicle producer’s stock should be sold, while Morgan Stanley reiterated its “equal weight” rating at the beginning of February with a price target of USD 379. Even if its stock rises, Tesla has serious challenges to address, ones that are likely to weigh heavily on the company’s valuation.

A major recent issue concerned ramping up production levels of the Model 3. Company management is still aiming for a target of 2,500 units per week by the end of Q1 2018, and 5,000 a week by the end of Q2. However, the company has postponed and changed its productions targets several times in recent times, and is currently said to be delivering only around 1,000 vehicles per week. Being able to scale production should make Tesla more profitable, but the company faces an uphill struggle to achieve this.

Meanwhile, demand might soon be affected by the potential elimination of a major incentive for customers: tax credit when buying electric vehicles. The federal government had planned on providing a tax credit of between USD 2,500 and USD 7,500, but this might soon be phased out. The Model 3, as the company’s least expensive vehicle, is the car best suited to those on a budget, and the prospect of buyers losing such a large discount could severely impact Tesla’s long-term outlook.

3 thoughts on “Is Tesla Stock a Good Investment?

  1. I still think TSLA is still going higher from here. I started seeing more and more Tesla cars on the streets nowadays. Heard about the demand in the Middle East and China as well. Demand is definitely not slowing down specifically their Model 3 series.

  2. Arnab Das says:

    Of course, a substantial argument could also be made that Musk’s near rock-star status among investors could also pose a unique risk: so many are willing to pay so much for Tesla shares precisely because of Musk’s presence.
    In fact, since going public, Tesla has 80% more shares outstanding than it did at the time of its IPO. Musk has also used senior convertible notes to help fund his ambitions.
    That’s because Tesla would either have to secure further debt to pay for the loan — and rates have been going up for Tesla as bond investors have fretted over the company’s finances — or issue more shares. Get the latest update about #TSLA just one click:

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